Payments Today
IPSO
Q 1 2012
Welcome...
...to the latest IPSO newsletter which will help inform
members and users of payment services about
developments in payments both here in Ireland and
internationally. IPSO leads the development of the
Irish payments industry, providing strategic and
operational direction as well as being the representative
body for payments in Ireland.
This issue has some particularly relevant and timely
articles for payment services providers and users, including
an update on the National Payments Plan for Ireland
from Tony Grimes the chairman of its Steering Committee,
the latest news on SEPA, the facts about contactless
cards and a guest article from UPC on Direct Debits
as well as our usual features.
We welcome and always encourage your feedback.
Details on how to contact us are on page four.
Enjoy Payments Today, Pat McLoughlin, CEO
in this issue...
A National Payments Plan
for Ireland
SEPA Regulation Update
Contactless Payment Cards
Did you know – Cash Usage
Direct Debit – UPC Experience
Cheque Guarantee Card
Scheme Now Closed
Special Thanks
In Brief:
Other Recent Headlines
A National Payments Plan for Ireland
Tony Grimes, Chairman, National Payments Plan Steering Committee
Ireland is currently facing an
immense set of challenges
to restore economic stability,
a task made all the harder by
the continued financial turmoil
and economic weakness
globally. Some of the challenges
are immediate, such as returning
the exchequer finances to a
sustainable level and restoring
Ireland’s reputation abroad.
In parallel, we must now be
making the structural changes to our economy
to ensure that our national competitiveness is
enhanced.
methods leading to a reduction in the reliance on
cash and paper. Ireland can and should be a leader
in this area - we have the youngest population of
Europe and have shown ourselves to be very fast
adaptors of new technology.
In keeping with its policy role regarding Ireland’s
payment systems, the Central Bank was requested
last year by the Minister for Finance to take the
lead in implementing a National Payments Plan
(NPP). I have been asked by the Governor of the
Central Bank to act as Chair of the NPP following
my retirement as Deputy Governor of the Central
Bank last summer.
The payments industry has an important part to
play in this. While in many areas of competitiveness
Ireland has improved substantially in recent years,
Ireland remains a laggard in our use of e-payments.
The National Competitiveness Council has ranked
Ireland as the second highest in the Euro-area in
terms of its use of cash as a proportion of GNP.
For the last number of months the Central Bank
has been working to initiate the NPP, and has been
engaging with a wide array of stakeholders. Ronnie
O’Toole - formerly Chief Economist of National
Irish Bank - has been appointed as the Programme
Manager. We are now getting into the detail of the
plan which is expected to be published in 2012,
with implementation to run up to end-2014.
The efficiency of Ireland’s payment systems’
infrastructure could be improved by making more
use of secure and efficient electronic payment
The NPP now wants to collect the views of the
large number of stakeholders who have an interest
in payments reform.
IPSO PAYMENTS TODAY : Q1, 2012 : PAGE1
The NPP would like to get views on the following:
Are there sections of society who would find
transiting from paper based to electronic forms
of payment either difficult or impossible?
For which types of transactions are there no
practical alternatives to cash and cheques currently?
What features of cash usage cause the greatest
difficulty and inconvenience for users?
Is a significant reduction of cheque usage in the
next three years realistic for your organisation?
What benefits/challenges will compliance to
SEPA payment standards bring?
Any views can be sent to daniel.mclean@centralbank.ie
I believe the task of turning Ireland from a laggard
to a leader in payments terms will be a very challenging
one. However, the prize in terms of improved cost
competitiveness, greater security, consumer
choice and social inclusion is, I believe, a very big
one. I look forward to working with all stakeholders,
including IPSO, to achieve these objectives.
More information:
National Payments Strategy section of IPSO.ie
SEPA Regulation Update
Mick O’Neill, SEPA Ireland Programme Manager
The latest step towards creating an integrated market for electronic
payments in euro was reached in Brussels last December with the
publication of the final text of the so-called SEPA Regulation which
sets out provisions for establishing technical requirements for
electronic credit transfers and direct debits in euro.
The milestones in the SEPA project to date have been the launch of
the SEPA Credit Transfer Scheme in January 2008 and the launch
of the SEPA Direct Debit Scheme(s) in November 2009. Thousands of
banks across Europe have signed up to participate in the schemes
but unfortunately migration to the new payment schemes has been
very slow. The majority of market participants recognise the value
of setting a deadline for migration to SEPA. An end-date for phasing out
legacy euro payment schemes creates awareness, ensures planning
security for all market participants and confirms the commitment
to making SEPA a reality.
On 16 December 2011, the European Commission published the
proposal for a ‘Regulation Establishing Technical Requirements
for Credit Transfers and Direct Debits in Euros and Amending
Regulation (EC) No 924 / 2009’. The SEPA Regulation defines 1st
February 2014 as the deadline in the euro area for compliance with
this Regulation. Effectively, this means that, by this date, existing
national euro credit transfer and direct debit schemes will have
to be replaced by the SEPA Credit Transfer and SEPA Direct Debit
Schemes developed by the European Payments Council. The SEPA
Regulation was formally adopted on February 14th 2012 by the Plenary
of the European Parliament and endorsed by the Council representing
EU Member States on February 28th 2012.
Main Provisions of the Regulation
Sets deadlines for migration to the SEPA
schemes1st February 2014
Sets out new provisions to ensure that
customer accounts are reachable for
payment transactions
Creates new rules for the use of BIC &
IBAN for all payments, both national
and cross-border
Provides that existing direct debit
mandates will continue to be legally valid
for the SEPA Direct Debit Scheme
Defines a new standard (file format) for
payments with ISO 20022 XML replacing existing standard
Empowers the European Commission to amend the technical
requirements for payments
Repeals Regulation 924/2009 in respect of charges for cross
border payments
There are a number of Member State derogations available in the
Regulation and work has commenced as to how these should apply
in Ireland.
This SEPA Regulation will impact all payment service providers
(banks) and payment users (customers) and IPSO and its member
banks will work closely with all stakeholders to ensure compliance.
More information: SEPA section of IPSO.ie
Contactless Payment Cards – the Facts
Úna Dillon, Head of Card Services & Communications
The number of contactless payment cards being
issued in Ireland is growing rapidly with at least
another one million contactless cards due into
the market by July of this year. The new cards
work in the same way as regular cards but the
new contactless function can be very useful for
those of us who are always in a hurry. The new
cards use RFID (Radio Frequency Identification)
technology with an electronic tag within the plastic
which allows a payment to be made without having
to introduce the card into a terminal or PIN entry
device. The cardholder holds or waves the card
near the reader to make a payment. It is simple,
fast, convenient and secure.
Key Features:
Transactions in the contactless environment are up to certain limits
which depend on the card issuer or retailer but will generally be in the
region of 115.
A card counter determines the need for a PIN and this will be based on
the volume of transactions carried out in a contactless environment,
the value of the sale and occasional random checks. The counter is
reset each time a PIN is used.
The contactless technology will provide most benefits for retailers such
as cafés, fast food outlets, newsagents, transport, taxis, car parking,
vending machines, etc. many of which are not currently accepting
payment cards.
The contactless technology works within a very close proximity, so
people should not be concerned that their card details can be captured
by someone just walking by. A thief would need to be within
approximately 15 mm of the card. There are millions of RFID cards
already operating in the UK since 2007 and no noticeable security issues
have arisen in this respect.
The card is secured by the same advanced technology that supports
Chip & PIN. Each time a customer enters their PIN during a contact
transaction they re-affirm that they are in possession of their card. If a
cardholder performs many consecutive contactless transactions, they
will occasionally be requested to revert to a Chip & PIN transaction for
their security. Each time the card meets a terminal or PIN entry device,
the PIN counter is reset.
The Key Benefits of RFID Cards are summarised
in the following table:
Consumers
Retailers
Banks
More convenient than cash
Speed and convenience at point of sale.
Transactions take less than 0.5 seconds
Increased use of credit and debit cards
for lower transaction values
Shorter transaction times
Greater footfall / increased turnover as
more customers go through the shop faster
Enter into markets where card payments
have previously not been accepted
Integration of application with existing
cards
Replacement of expensive low-value cash
payments
Reduced cash handling costs
Ease of use across all ages
Guaranteed payments in some shops
Improved proposition for bank customers
- both merchants and cardholders
Overcome ‘card shame’ when cards are
not accepted for low value transactions
in some shops
Builds on the Chip & PIN infrastructure
More information: Card Services section of IPSO.ie
IPSO PAYMENTS TODAY : Q1, 2012 : PAGE 2
Did You Know? Facts on Cash Usage
The total value of euro notes and coins in circulation is almost 1900 billion, now exceeding the value of all US dollars in circulation
The annual total value of ATM withdrawals in the euro countries is actually greater than this at 1940 billion which works out at about
12,800 per capita. By comparison, the amount spent using payment cards in the EU was 11,075 billion in 2010
More than 12 billion ATM cash withdrawals per annum are made in the EU
In Ireland the total value of card payments and ATM withdrawals are very similar at 122.8 billion and 122.3 billion respectively
Cash remains the most popular payment instrument in Europe, especially for small amounts
Cash is a very expensive payment instrument to operate from a societal point of view, especially compared with other payments
instruments, because of production, storing, distribution and security costs
More information: Industry Statistics section of IPSO.ie
Direct Debit
A Key Element of UPC’s Business Development Strategy
Anna Coyle, Billing, Collections & PMO Director at UPC
UPC is Ireland’s market leading cable television
operator providing video, broadband internet and
digital telephony services. Anna Coyle, Billing,
Collections & PMO Director explains here why Direct
Debit forms a key element of development strategy.
UPC is a major presence in consumer and business
markets. The company has well over half a million
customers throughout Ireland receiving
individual products and services. With
such a significant customer base, Direct
Debit is a hugely important payment
option for UPC. Over 50% of our customer base
currently uses this method.
Direct Debit is an important tool in managing cash flow, payment dates,
maintaining lower debtor balances and reducing bad debt risk. Therefore,
encouraging take up of Direct Debit will remain a focus and a preferred
payment option for UPC.
At every customer touch point when we are discussing or advising
around payment options, we encourage payment by Direct Debit. We
also regularly review Direct Debit and other payment metrics with
a view to encouraging new and existing customers to avail of
Direct Debit services. The appeal of UPC’s services continues
to grow and with that we anticipate continuing growth in
our customer base and Direct Debit take-up, particularly
as we introduce new product innovations across our
next generation network in the future.
Setting up a Direct Debit has many benefits.
From a customer perspective, it offers convenience
and ensures that bills are paid on time and
not liable for any late fees or service interruptions.
There is no need to go to the post office or
other cash outlets, no queuing during lunch
break, no need to keep remembering to pay –
customers can rest assured that their payment will
be made, in full and on time no matter where
they are!
UPC has ensured that we offer clear choice and great
value to consumers across our triple play bundles.
In short, by combining TV, Internet and Phone services
from one operator, paying in one single payment for
all three services is made easier and more convenient. It
is also completed automatically each month through direct
debit ensuring a reduced administrative burden for the business.
To ensure our customers can stay fully updated on
their payments, UPC provides an online bill viewing
facility which provides them with a secure method
to view any of their last 12 monthly bills. As part of
our eBilling service we send SMS updates letting
customers know when their latest bill is available
to view. By combining Direct Debit with the convenience
of eBilling, this provides an optimum level of service
for our customers and it has become a hugely popular
option for them.
Operationally, we ensure that all of our staff is kept
informed of key company goals and, since Direct Debit
is a key element of our service offering, we promote this
internally to increase awareness of the value of Direct Debit
within UPC. Keeping staff motivated and focused on the benefits
of Direct Debit, both for the business and consumers, has resulted
in a steady growth of Direct Debit popularity across our customer base.
Reminder
The Cheque Guarantee Card Scheme in Ireland has Closed
Russell Burke, Head of Strategic Development
The Cheque Guarantee Card Scheme in the Republic of Ireland closed on 31st December 2011. Cheques written
and accepted under the Scheme guarantee, up to and including the closure date of the Scheme, and presented
within six months of the date of the cheque, will be paid where the “Rules of Use” of the Scheme have been
complied with.
Cheques can of course still be used as normal but are no longer covered by the Scheme. Some cards may continue
to carry the Scheme logo but the guarantee no longer applies. Other card functions (e.g. ATM, debit card) are
not affected.
More information: Cheque Guarantee Card Scheme section of IPSO.ie
IPSO PAYMENTS TODAY : Q1, 2012 : PAGE 33
Special Thanks
Jennifer Chamberlaine
I would like to thank Jennifer Chamberlaine, who has recently left the organisation,
for her work in establishing and co-editing this newsletter – IPSO Payments Today
Russell Burke, Co-Editor
In Brief: Other Recent Headlines
NB - IPSO IS NOT RESPONSIBLE FOR THE CONTENT OF EXTERNAL INTERNET SITES
EC bids for integrated card, internet and mobile payments
The European Commission has published its green paper on how Europe can break down barriers to an
integrated market for card, Internet and mobile payments.
Source: Finextra
SEPA migration deadline set at February 2014
The European Parliament and Council have finally reached agreement on a deadline of February 2014 for the
migration to SEPA credit transfers and direct debits.
Source: Finextra
UK contactless payments momentum gathers pace
Nearly three quarters of British contactless card users think that the technology will eventually become more
commonplace than cash and 84% see cards as just a stepping stone to mobile NFC payments, according to a
survey for Visa Europe.
Source: Finextra
Paypal sets 2016 as tipping point for m-payments on the high street;
Barclays sees shorter time-span
PayPal says that 2016 will mark the tipping point for mobile payments in the UK, when consumers will be able to use
their mobile phones to pay for everyday items on the high street rather than cash, cheques or cards.
Source: Finextra
VISA targets unbanked with mobile pre-paid account
Targeting the vast unbanked market in developing countries, Visa has launched a pre-paid account that can be
accessed through mobile phones.
Source: Finextra
LA CAIXA turns Barcelona contactless
La Caixa has partnered with Visa Europe on a major contactless payments push in Barcelona, rolling out cards, point-of-sale terminals and
ATMs featuring the technology across the city.transactions will reach a whopping $670 billion by 2015, up from $240 billion this year.
Source: Finextra
3V launches 3V VISA Prepay mobile service in the Netherlands
3V Netherlands, the Dutch franchise partner of Irish payment services provider 3V Transaction Services, has launched the 3V Visa Prepay service on 3V’s mobile financial services platform.
Source: The Paypers
Acknowledgements:
Editor: Russell Burke
Design: Colin Derham
Contact Details:
Email: info@ipso.ie | Tel: +353 1 663 6740 | Web: IPSO.ie
IPSO PAYMENTS TODAY : Q1, 2012 : PAGE 4
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